Business Reporter

Qantas' strategy of continually building capacity may have have hit its limit.

The battle for domestic passengers has forced Qantas to all but admit defeat to Virgin Australia , with the flying kangaroo to add zero capacity for the first three months of the next financial year.

Despite the Easter long weekend falling in April in 2014, Qantas has struggled to put passengers in seats compared with a year ago.

Passenger numbers fell 1.5 per cent in April, compared with the previous year, despite a 2 per cent increase in capacity and demand edging 0.4 per cent higher.

Qantas said that most of its domestic business comes from corporate passengers and due to a decrease in April, with Easter in late March and the Anzac day long weekend falling so close to each other, many customers simply took more time off rather than returning to work.

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Virgin Australia has been pushing Qantas in a price war for domestic low-cost customers, forcing the flag carrier to reassess its plans for next year.

"In response to changing conditions to the domestic market, the Qantas Group has revised planned capacity additions in the first three months of financial year 2015," the airline said in its monthly traffic statistics report.

As a result, Qantas will not be adding any capacity in the first three months of the 2015 financial year, and will look to revise growth, according to demand, supply and customer requirements for the following period.

Qantas has long defended its strategy to maintain 65 per cent of market share, despite rising costs and job cuts.